UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-37883

NUTANIX, INC.

(Exact name of registrant as specified in its charter)

Delaware	27-0989767
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1740 Technology Drive, Suite 150

San Jose, CA 95110

(Address of principal executive offices, including zip code)

(408) 216-8360

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.000025 par value per share	NTNX	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☒	Accelerated Filer	☐
Non-accelerated Filer	☐	Smaller Reporting Company	☐
		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 31, 2023, the registrant had 235,759,366 shares of Class A common stock, $0.000025 par value per share, outstanding.

TABLE OF CONTENTS

			PAGE
PART I.		FINANCIAL INFORMATION
	Item 1	Financial Statements (Unaudited)	6
	Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
	Item 3	Quantitative and Qualitative Disclosures About Market Risk	57
	Item 4	Controls and Procedures	57
PART II.		OTHER INFORMATION
	Item 1	Legal Proceedings	60
	Item 1A	Risk Factors	60
	Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	61
	Item 3	Defaults Upon Senior Securities	61
	Item 4	Mine Safety Disclosures	61
	Item 5	Other Information	62
	Item 6	Exhibits	62
EXHIBIT INDEX			63
SIGNATURES			64

3

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains express and implied forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which statements involve substantial risks and uncertainties. Other than statements of historical fact, all statements contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, our business strategy and plans and our objectives for future operations, are forward-looking statements. The words "believe," "may," "will," "potentially," "estimate," "continue," "anticipate," "plan," "intend," "could," "would," "expect," or words or expressions of similar substance or the negative thereof, that convey uncertainty of future events or outcomes are intended to identify forward-looking statements. Forward-looking statements included in this Quarterly Report on Form 10-Q include, but are not limited to, statements regarding:

•our future billings, revenue, cost of revenue and operating expenses, as well as changes in the cost of product revenue, component costs, contract terms, product gross margins and support, entitlements and other services revenue and changes in research and development, sales and marketing and general and administrative expenses;

•our business plans, strategies, initiatives, objectives and outlook, as well as our ability to execute such plans, strategies, initiatives and objectives successfully and in a timely manner, and the benefits and impact of such plans, initiatives and objectives on our business, operations, and financial results, including any impact on our revenue and product mix, average contract term lengths and discounting behavior;

•our plans for, and the timing of, any current and future business model transitions, including our ongoing transition to a subscription-based business model, our ability to manage, complete or realize the benefits of such transitions successfully and in a timely manner, and the short-term and long-term impacts of such transitions on our business, operations and financial results;

•the benefits and capabilities of our platform, solutions, products, services and technology, including the interoperability and availability of our solutions with and on third-party platforms;

•our plans and expectations regarding new solutions, products, services, product features and technology, including those that are still under development or in process;

•our growth strategy, our ability to effectively achieve and manage our growth, and the amount, timing and impact of any investments to grow our business, including any plans to increase or decrease investments in our global engineering, research and development and sales and/or marketing teams;

•our go-to-market strategy and the impact of any adjustments thereto, including any adjustments to our go-to-market cost structure, in particular, our sales compensation structure, and our plans regarding pricing and packaging of our product portfolio;

•the success and impact of our customer, partner, industry, analyst, investor and employee events on our business, including on future pipeline generation;

•the impact of our decision to use new or different metrics, or to make adjustments to the metrics we use, to supplement our financial reporting;

•our reliance on key personnel;

•anticipated trends, growth rates and challenges in our business and in the markets in which we operate, including the segmentation and productivity of our sales team;

•market acceptance of new technology and recently introduced solutions;

•our ability to increase sales of our solutions, particularly to large enterprise customers;

•our ability to attract new end customers and retain and grow sales from our existing end customers;

4

•our plans to implement remedial measures in response to the material weakness identified by management;

•our plans to implement recommendations arising out of or relating to our Audit Committee’s completed investigation;

•our ability to maintain and strengthen existing strategic alliances and partnerships and address macroeconomic supply chain shortages, including our relationships with our channel partners and original equipment manufacturers, and to develop any new strategic alliances and partnerships, and the impact of any changes to such relationships on our business, operations and financial results;

•the effects of seasonal trends on our results of operations;

•our expectations concerning relationships with third parties, including our ability to compress and stabilize sales cycles;

•our ability to maintain, protect and enhance our intellectual property;

•our exposure to and ability to guard against cyber attacks and other actual or perceived security breaches;

•our ability to continue to grow our business internationally;

•the competitive market, including our ability to compete effectively, the competitive advantages of our products, and the effects of increased competition in our market;

•anticipated capital expenditures;

•future acquisitions or investments in complementary companies, products, services or technologies and the ability to successfully integrate completed acquisitions;

•our ability to stay in compliance with laws and regulations that currently apply or become applicable to our business both in the United States and internationally, including recent changes in global tax laws;

•macroeconomic, geopolitical, and industry trends and environment, projected growth or trend analysis;

•the impact of events that may be outside of our control, such as political and social unrest, terrorist attacks, hostilities, war, malicious human acts, climate change, natural disasters (including extreme weather), pandemics or other major public health concerns, and other similar events;

•our ability to attract and retain qualified employees and key personnel; and

•the sufficiency of cash balances to meet cash needs for at least the next 12 months.

We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs in light of the information currently available to us. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described under the heading "Risk Factors" in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended July 31, 2022 and in Part II, Item 1A of this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment and new risks emerge from time to time. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained or implied in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and trends discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, performance, or events and circumstances reflected in the forward-looking statements will be achieved or will occur. The forward-looking statements in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation, and expressly disclaim any obligation, to update, alter or otherwise revise or publicly release the results of any revision to these forward-looking statements to reflect new information or the occurrence of unanticipated or subsequent events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements.

5

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

	Page
Condensed Consolidated Balance Sheets as of July 31, 2022 and April 30, 2023	7
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended April 30, 2022 and 2023	8
Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended April 30, 2022 and 2023	9
Condensed Consolidated Statements of Stockholders' Deficit for the Three and Nine Months Ended April 30, 2022 and 2023	10
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended April 30, 2022 and 2023	12
Notes to Condensed Consolidated Financial Statements	13
Note 1: Overview and Basis of Presentation	13
Note 2: Correction to Prior Period Financial Statements	14
Note 3: Revenue, Deferred Revenue and Deferred Commissions	16
Note 4: Fair Value Measurements	19
Note 5: Balance Sheet Components	21
Note 6: Convertible Senior Notes	23
Note 7: Leases	28
Note 8: Commitments and Contingencies	30
Note 9: Stockholders' Equity	31
Note 10: Equity Incentive Plans	32
Note 11: Income Taxes	34
Note 12: Restructuring Charges	34
Note 13: Net Loss Per Share	35
Note 14: Segment Information	36

6

NUTANIX, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	As of
	July 31, 2022			April 30, 2023
	(in thousands, except per share data)
Assets
Current assets:
Cash and cash equivalents	$	402,850		$	439,918
Short-term investments		921,429			918,570
Accounts receivable, net of allowances of $644 and $745, respectively		124,559			135,073
Deferred commissions—current		115,356			113,736
Prepaid expenses and other current assets		93,787			121,611
Total current assets		1,657,981			1,728,908
Property and equipment, net		113,440			115,465
Operating lease right-of-use assets		118,740			97,804
Deferred commissions—non-current		252,234			236,935
Intangible assets, net		15,829			7,334
Goodwill		185,260			185,260
Other assets—non-current		22,265			24,291
Total assets	$	2,365,749		$	2,395,997
Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable	$	44,931		$	34,235
Accrued compensation and benefits		149,811			152,167
Accrued expenses and other current liabilities		59,568			108,965
Deferred revenue—current		720,993			806,002
Operating lease liabilities—current		39,801			31,481
Convertible senior notes, net—current		145,456			—
Total current liabilities		1,160,560			1,132,850
Deferred revenue—non-current		724,545			737,338
Operating lease liabilities—non-current		89,782			73,036
Convertible senior notes, net		1,156,205			1,207,296
Other liabilities—non-current		35,161			34,544
Total liabilities		3,166,253			3,185,064
Commitments and contingencies (Note 8)
Stockholders’ deficit:
Preferred stock, par value of $0.000025 per share— 200,000 shares    authorized as of July 31, 2022 and April 30, 2023; no shares issued    and outstanding as of July 31, 2022 and April 30, 2023		—			—
Common stock, par value of $0.000025 per share—1,042,004 (1,000,000     Class A, 42,004 Class B) and 1,000,000 Class A shares authorized as    of July 31, 2022 and April 30, 2023, respectively; 226,938 and    235,744 Class A shares issued and outstanding as of July 31, 2022    and April 30, 2023, respectively		6			6
Additional paid-in capital		3,583,928			3,834,845
Accumulated other comprehensive loss		(6,076	)		(4,283	)
Accumulated deficit		(4,378,362	)		(4,619,635	)
Total stockholders’ deficit		(800,504	)		(789,067	)
Total liabilities and stockholders’ deficit	$	2,365,749		$	2,395,997

See the accompanying notes to condensed consolidated financial statements.

7

NUTANIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended April 30,						Nine Months Ended April 30,
	2022			2023			2022			2023
	(in thousands, except per share data)
Revenue:
Product	$	199,616		$	212,507		$	588,872		$	671,619
Support, entitlements and other services		204,042			236,074			606,384			697,066
Total revenue		403,658			448,581			1,195,256			1,368,685
Cost of revenue:
Product		13,739			12,430			43,056			40,452
Support, entitlements and other services		66,110			69,999			198,208			211,277
Total cost of revenue		79,849			82,429			241,264			251,729
Gross profit		323,809			366,152			953,992			1,116,956
Operating expenses:
Sales and marketing		234,623			229,261			726,475			695,271
Research and development		142,334			143,016			428,731			434,760
General and administrative		39,552			52,515			123,871			182,728
Total operating expenses		416,509			424,792			1,279,077			1,312,759
Loss from operations		(92,700	)		(58,640	)		(325,085	)		(195,803	)
Other expense, net		(15,676	)		(7,168	)		(309,557	)		(30,696	)
Loss before provision for income taxes		(108,376	)		(65,808	)		(634,642	)		(226,499	)
Provision for income taxes		3,611			5,161			12,967			14,774
Net loss	$	(111,987	)	$	(70,969	)	$	(647,609	)	$	(241,273	)
Net loss per share attributable to Class A and Class B    common stockholders—basic and diluted (1)	$	(0.50	)	$	(0.30	)	$	(2.96	)	$	(1.04	)
Weighted average shares used in computing net loss    per share attributable to Class A and Class B    common stockholders—basic and diluted (1)		222,473			234,735			218,888			231,702

(1)Effective January 3, 2022, all of the then outstanding shares of Nutanix, Inc. Class B common stock were automatically converted into the same number of shares of Nutanix, Inc. Class A common stock. See Note 9 for further details.

See the accompanying notes to condensed consolidated financial statements.

8

NUTANIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

	Three Months Ended April 30,						Nine Months Ended April 30,
	2022			2023			2022			2023
	(in thousands)
Net loss	$	(111,987	)	$	(70,969	)	$	(647,609	)	$	(241,273	)
Other comprehensive loss, net of tax:
Change in unrealized loss on available-for-sale    securities, net of tax		(3,711	)		1,518			(6,138	)		1,793
Comprehensive loss	$	(115,698	)	$	(69,451	)	$	(653,747	)	$	(239,480	)

See the accompanying notes to condensed consolidated financial statements.

9

NUTANIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(Unaudited)

	Nine Months Ended April 30, 2022
	Common Stock					Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares			Amount		Capital			Loss			Deficit			Deficit
	(in thousands)
Balance - July 31, 2021		214,210		$	5	$	2,615,317		$	(8	)	$	(3,636,283	)	$	(1,020,969	)
Adoption of ASU 2020-06		—			—		(148,598	)		—			100,585			(48,013	)
2026 Notes derivative liability reclassification		—			—		698,213			—			—			698,213
Issuance of common stock through employee equity    incentive plans		2,809			—		1,352			—			—			1,352
Issuance of common stock from ESPP purchase		1,309			—		28,786			—			—			28,786
Repurchase and retirement of common stock		(1,369	)		—		(14,852	)		—			(43,718	)		(58,570	)
Unwinding of 2023 Notes hedges		—			—		39,880			—			—			39,880
Unwinding of 2023 Notes warrants		—			—		(18,390	)		—			—			(18,390	)
Stock-based compensation		—			—		90,547			—			—			90,547
Other comprehensive loss		—			—		—			(651	)		—			(651	)
Net loss		—			—		—			—			(420,206	)		(420,206	)
Balance - October 31, 2021		216,959			5		3,292,255			(659	)		(3,999,622	)		(708,021	)
Issuance of common stock through employee equity    incentive plans		3,580			—		1,914			—			—			1,914
Stock-based compensation		—			—		88,045			—			—			88,045
Other comprehensive loss		—			—		—			(1,776	)		—			(1,776	)
Net loss		—			—		—			—			(115,416	)		(115,416	)
Balance - January 31, 2022		220,539			5		3,382,214			(2,435	)		(4,115,038	)		(735,254	)
Issuance of common stock through employee equity    incentive plans		2,228			—		744			—			—			744
Issuance of common stock from ESPP purchase		1,518			—		33,847			—			—			33,847
Stock-based compensation		—			—		84,506			—			—			84,506
Other comprehensive loss